If you have two debts with similar balances, then pay off the debt with the higher interest rate first. You’ll feel good seeing results quickly and be motivated to tackle the next credit card. Option Two: Pay off your lowest balance: Need a mental win? Work on the card with the lowest balance to give you the psychological boost of accomplishing debt repayment. Attack your highest interest rate debt first and when it’s paid off, move on to the next highest interest rate. Option One: Target your highest rate: Go with the mathematical reality that your highest rate debt is costing you the most money.

How do you choose what to pay down first? You can attack the balances in one of two ways: Yes, you must pay more than the minimum payment on your credit cards to get out of debt. Step 4: Make extra payments against ONE of your debts. In the next step I’ll deal with how to apply this extra repayment against your debt.

See How to negotiate a lower credit card interest rate for the script. And since most credit cards charge anywhere from 0% to 20% in interest, making a five-minute phone call could save you hundreds, even thousands in interest charges.

Negotiate a lower credit card interest rate: Asking for a lower rate is free.

Working an extra shift, freelancing, finding an off-hours gig, selling unneeded items are all tactics I have taken to boost income.

Boost income: This is where you have to really want to get out of debt.

See 50 Ways to Save $1,000 a Year for a few more ideas. Reduce your grocery bill (buy generics, switch to discount grocers, cook at home, eat out less). Cut repeatable expenses, subscriptions, streaming, automatic billings you forgot about.

Cut costs: Cutting back and spending less money on your variable expenses is a surefire way to add additional dollars to your debt repayment plan.

The debt reduction spreadsheet helped find an additional $379.54 available to put against debt.įor those with little wiggle room in your budget for debt repayment, there are a few options. The total average monthly interest is $1,031.56, and the total monthly payment is $2,596.46. In the example above, there’s a total debt of $274,987.45 with an average interest rate of 4.50%.

Income and bills spreadsheet